If you have received a refund from a lender, you may see that there is an “8%” element included.
This applies in many situations, including PPI, affordability refunds and NOSIA refunds. Often the lender will have deducted basic rate tax from this 8% part.
Since April 2016 non taxpayers and basic rate taxpayers can probably get some or all of this back from the HMRC.
This article looks at who can claim this tax back and how to do it. NB I am not a tax expert and cannot give you tax advice on your situation.
Contents
Why was this taxed?
People often feel cross that they are charged tax on a refund. If you return something to a shop for a refund, you wouldn’t expect that to be taxed, it’s your own money you are getting back.
The taxman agrees – the refund part isn’t taxable.
But if 8% extra interest has been added to your refund, this is treated like interest you get on savings and so it’s taxable as HMRC explains here.
Most lenders deduct tax at the basic rate of 20% from the 8% interest and send this tax to the HMRC.
When they give you details, a line which says “interest gross” is what they worked out the 8% interest to be and a line which says “interest net” has had the 20% of tax taken off. This is an example:
Refund of Interest and Fees: £1,513.06
8% interest net: £385.02
Total settlement: £1,898.08
Tax details: 8% interest gross: £481.27
basic rate tax deduction: £96.25
Here the amount she was sent was £1,898.08. This was the refund plus the 8% interest (gross) less the basic rate tax deducted.
But you are allowed to earn some interest without paying tax
A basic rate taxpayer is allowed to earn £1,000 in savings interest in a tax year without paying tax on it. So this will save you up to £200 in tax – 20% of £1,000.
This amount is £500 for a higher rate taxpayer – which gives the same refund as 40% of £500 is also £200.
This applies to the 8% interest you have got as part of your refund. This interest is still taxable – that’s why HMRC haven’t changed their page saying that it is taxable.
But the new tax-free band means that many people getting one of these refunds shouldn’t have to pay tax and can claim it back if the lender has deducted tax.
How much can you get back?
This depends on whether you pay income tax and at what rate.
The following are simple cases. Remember if you are close to the top end of a tax band, the 8% being added may push you over into the next rate tax band.
Luckily you don’t have to do the calculations, just tell the taxman the numbers and he will work out your refund.
If you have a low income or don’t pay income tax at all
If you have an income of less than £18,500 including the 8% on your refund, then all your refund should be tax-free. You should get a refund of all tax deducted.
(Why £18,500? It’s the 2019/20 personal allowance of £12,500 plus the “starting rate of tax on savings ” of £5,000 plus the £1,000 a basic rate taxpayer is allowed to receive from savings tax-free… see Income tax rates and personal allowances for details.)
If you are a basic rate taxpayer
If your income is over £18,500 and you pay basic rate tax, you can get back up to £200 of tax that was deducted.
BUT if you received any refunds including 8% interest with no tax deducted and the total amount of any interest you were paid came to over £200 you will have to pay tax on this – see below for some calculations.
If you are a higher rate taxpayer
The first £200 of any interest should be tax-free.
This is more complicated because the firm has deducted tax at 20% but you should really have paid 40%.
As a result:
- if you had less than £100 deducted, you can claim it all back (as if you double this you will still be under the £200 you can get tax free)
- if you had between £100 and £200 deducted, you can claim back some of this;
- if you had over £200 deducted you owe the taxman more. The extra is the same amount as the tax that has already been deducted LESS £200 which is your tax-free amount.
Make a claim to the taxman by completing an R40 form
Unless you complete a self assessment tax form (see below), use the R40 form to get some or all of this tax back.
You can apply online or complete a paper R40 form and post it to HMRC – links to these are here. The online questions are the same as the form, so I’ll just cover using the paper form here.
Use a separate form for each tax year. A tax year runs from April to March the following year. Once the tax year has finished, you can claim for all refunds you were given in the last year and you also know how much other income you had during that year (from your P60 or P45) so it’s simple to fill in the form.
If you just had one refund and no other savings interest, you enter the details of your normal income from a job or benefits or a pension in boxes 2.1 to 2.9.
Then you put the details of your refund in boxes 3.1, 3.2 and 3.3.
As an example, take the refund already mentioned:
Refund of Interest and Fees: £1,513.06
8% interest net: £385.02
Total settlement: £1,898.08
Tax details: 8% interest gross: £481.27
basic rate tax deduction: £96.25
From these you need 3 figures for the R40 form. Ignore the refund element – that is not taxable. Instead focus on the 8% element – you want the gross figure (481.27), the net figure (385.02) and the tax deducted figure (96.25).
Here is how you put them into the R40 form:
If you had several refunds in this tax year with 8% interest included, add them up and put the totals in these boxes:
- DO include any refunds where 8% interest was added but the lender didn’t take any tax off;
- DO include any interest you received from taxable bank accounts;
- DON’T include the interest refunds or associated interest part of the refunds – these are not taxable;
- DON’T include any interest from tax-free savings accounts, eg ISAs or N&SI accounts which aren’t taxable.
Don’t use R40 if you submit a self assessment form
The R40 form is for use by people who don’t submit a self-assessment form.
If you are self-employed or have to submit a self-assessment for some other reason, don’t use the R40 form. Instead just enter the details of the 8% interest and tax deducted on your self-assessment form as “other savings income where tax has been deducted at source”. Or tell your accountant the numbers if they complete the form for you.
FAQs on getting tax back on these claims
How far back can I go?
You have four years from the end of the tax year in which you received the refund to claim a refund.
So, if you received a refund from a lender in 2021/22, you have until 5 April 2026 to make a claim to the taxman. If the refund happened in 2018/19, you have until 5 April 2023 to put in your claim.
It is now too late to make a claim for refunds that you received before April 2018.
Do I have to wait for the end of the tax year?
You can make a claim for the current tax year using the R40 form:
- put an X in box 1.8 on the first page to say this is an interim claim;
- for the boxes in section 2, estimate what your income from work, benefits will be for the whole tax year, don’t just put in what you have received so far.
But if you may get more refunds, it’s best to wait until all your complaints have completed before putting in an interim claim.
What if you get more than £1,000 in added interest during the year?
When the 8% interest on your refunds in a tax year add up to more than £1,000, you do have to pay tax on the extra so you won’t get all the tax deducted back – unless you don’t pay tax at all.
Suppose you had a large refund including £1,400 of 8% interest. The lender will have deducted £280 in basic rate tax but you should get a refund of £200 back.
You don’t have to do the sums and say what the refund should be. Just put the details of the interest and tax deducted on the form and the taxman will do the calculation.
What if not all refunds had tax deducted?
Sometimes you may get a refund with 8% interest added but no tax deducted. These were still taxable. So they need to be included in the “under or over a 200 tax deducted” calculation. It is possible you may end up owing the tax man money in this case.
Example 1
PPI refund includes 8% interest of £800 and tax deducted £200
Payday loan refund includes 8% interest £600 and no tax deducted
Here you had a total taxable amount of 600 + 800 = 1400. 20% basic rate tax on this would be £350, but £200 is this should be tax-free so you should have paid tax of £150. £200 has been deducted for tax so you should get a rebate of 200-150 = £50
Example 2
1st payday loan refund includes 8% interest of £500 and tax deducted £150
2nd payday loan refund includes 8% interest £1600 and no tax deducted
Here you had a total taxable amount of 500 + 1600 = 2100. 20% basic rate tax on this would be £525, but £200 is this should be tax-free so you should have paid tax of £325. £150 has been deducted for tax but this isn’t enough, so you actually owe the taxman 325-150 = £175.
What to do if you can’t pay a tax bill
How to ask for refunds for all types of debt
Unaffordable car finance – your options
Fay says
Hello. I am hoping someone can help me?
So I have had several refunds with 8% interest added. It looks as so Wonga are the only one who deducted the tax. I am little confused as to I can only claim this or if I total up all the 8% interest totals and add them in there and only write in the Wonga deduction? Also, in the image soon on the article it shows entries inn 2,1 and 2.2 – do I add in my earnings to date and tax to date here?
I think I am being thick!!
Many thanks
Sara (Debt Camel) says
Yes you need to add up all the 8% interest you have received, including from the lenders that didn’t deduct tax.
As it is now February, it may be better to wait until after April so you can put your actual earnings and tax paid during the year, otherwise you have to estimate what these will be, not put the amounts received /paid to date in.
Fay says
Thank you. So by doing this, I should get a refund on all the 8%? I tried to speak on line with the tax office and they said it’s only the tax that has been deducted ie by Wonga. I don’t want to end up with a tax bill!!
Many thanks
Sara (Debt Camel) says
No, you can only get refunded what has been deducted!
Yes, you could get a tax bill – if the gross amount in 3.3 is more than £1000 for a basic rate tax payer, then you should be paying some tax and it may be that not enough has been deducted by the lenders. Obviously you don’t have to apply for a refund in this case … but really you should be telling the tax man you owe money.
Kee says
Confused, for higher rate tax payers, we calculate 40% of the 8% interest and can only claim back up to £500 paid? is that correct?
Sounds like being double stung!
Sara (Debt Camel) says
The 8% interest that is being added is compensation for the interest you could have received if you hadn’t had to pay the sums that are being refunded. It is therefore taxed as though it is interest you have earned.
This new tax free element is because the government has decided to give everyone a £200 rebate on any savings tax paid. For basic rate tax payers thie is equivalent to claiming back the interest on £1000 (ie at 20%), for higher rate taxpayers it is equivalent to claiming back the interest on £500 (ie at 40%)
This isn’t a double sting!
Kee says
So, my interest deducted by PDUK was £321.00 (it says at 20%) so when I attempt to claim back from the tax man, do I then owe money because it is actually £642.00? Help, i’m so confused!
Ignore my post below, I didn’t think it saved the first time!
Sara (Debt Camel) says
This is what your tax should be:
– the 8% interest addition is treated as savings interest and is taxable.
– You have to pay tax on this at your marginal rate – it sounds as though you are a higher rate tax payer so 40%.
– But you are entitled to the first £500 of savings income to be tax free.
– this tax free element happens once in a tax year. So if you have refunds from several different lenders you still only get one tax free element.
Some lenders such as PDUK are making a “first guess” at the tax by duducting basic rate tax from the 8% interest. This is wrong for almost everyone:
– if the 8% element is low, you can probably reclaim all the tax back as it will come in the new tax free element
– if you are paying higher rate tax, the 20% deduction is not enough
– if you had refunds from other lenders these matter for your actual tax calculation
– if you have any other savings interest.
Some lenders aren’t deducting any tax. That’s fine if the amount is less than the tax free band. It’s not fin if it is more than the tax free band or if you are over that amount when you take refunds from other lenders into account.
So… how much 8% interest have you received from these payday refunds in the 16/17 tax year? how much tax has been deducted? do you have any other savings interest in this tax year?
kee says
Hi, thanks for that,
No other savings, refunds 2016-2017 of 8% interest = £827.95 (they took off £165.59)
2017-2018 (refund yesterday) of 8% interest = £1,605.15 (they took off £321.03)
So, do I assume for example, the £321.03, should have been £642.06 and that I can claim £500 of that back?
(so basically the tax man will give me money back from last year but take from this year?)
I am not due any further refunds back and do not have savings so won’t have any further credit interest this year.
kee says
Ahh hang on, so I get back £178.79 from 2017-2018??
Kee says
So for higher rate tax payers, 40% should be deducted but only up to £500 is waived? sounds like being double stung
Sara (Debt Camel) says
Not really, 20% of 1000 is 200. 40% of 500 is also 200. So this way everyone will get a refund of £200 if they get over the 1000/500 limit.
Mitch says
Submitted mine today in just a couple of mins. Thanks Sara :)
Mitch says
1 Week later, cheque sent out for the amount claimed. Thanks again! :)
Mitch says
For those who are looking to reclaim the tax deducted.
I had a payday loan payout in the last tax year (before April 2017), used this page and a cheque has been sent for the amount just one week later.
Thanks again!
craig says
I had 3 refunds with a gross total of £1563.70 gross amount before tax was taken off. The amount of tax deducted was £321.47.
So if i read above correct i still need to pay tax on the extra as the total was over £1000??
The refunds have been from June 2016 until March 2017 and i am a basic rate tax payer.
Sara (Debt Camel) says
From what you have written (and obviously I don’t know anything about your other tax affairs, ie whether you have had other savings interest) it is likely that you would get a refund of £200 – this is the basic rate tax you have paid on the first £1000 of these refunds which should be tax free. That will leave you having paid £121 tax on the rest.
Craig says
Thank you Sara I checked the gov site and it says they have sent a response so i assume it’s coming in the post as no email. Will see what it says. Craig
Rachel says
I’m completing the tax form on the gross pay before tax what do I put if I have a salary sacrifice do I put the amount before the sacrifice or amount after? Thank you
Sara (Debt Camel) says
I’m sorry but I don’t know. The HMRC helpline is usually OK at this time of year (a nightmare in January) or even try the webchat? https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees
Rachel says
Thanks Sara I think I understand it now this would just be a little extra bonus to get this back also
Rachel says
I’m confused now after reading this I had approx £750 tax taken from the interest I received, do I get that all back? Or just £200?
Sara (Debt Camel) says
Just £200
Mike says
I am also confused
my interest was £3,186
my tax deducted was £637
will i receive the £200 or owe the tax man?
Sara (Debt Camel) says
Was all this interest received in the same tax year?
Are you a basic rate tax payer?
Have you included all the interest you received, even where there was no tax deducted?
mike says
yes
yes
no, just this one refund, the others didn’t make it clear they had actually paid the tax
Sara (Debt Camel) says
OK, you need to know for all the refunds, the amount of 8% interest added and the amount of any tax deducted. Some may not have deducted tax even though they should have…
Frances Sinclair says
I received 2 PPI refunds in the 2016/17 tax year. The interest has been classed by HMRC as taxable income and has pushed me into the higher rate tax payer bracket, I still work and receive a pension from previous employment. I paid tax at source for both refunds. Are HMRC correct?
Sara (Debt Camel) says
The 8% interest is taxable income so if you were close to the higher rate tax boundary, yes this is possible. But have they allowed for the tax-free savings part?
Frances Sinclair says
Yes but only for £500?
Sara (Debt Camel) says
£500 is correct if you are paying higher rate tax , as 40% of that gives the same £200 you would save if you were a basic rate tax payer and paying tax at 20% on £1000.
David says
I was refunded at the beginning of march and the tax was taken out by wonga. I completed the r40 form online, and HMRC have come back saying they don’t owe me anything. The online form doesn’t give you a option to type in what you think was overpaid like the paper form. Is it possible wonga have paid the tax in the new financial year? I’ve had a few more refunds since so this year I wouldn’t be eligible to claim anyway.
Sara (Debt Camel) says
It doesn’t matter when Wonga paid it, the correct date for tax purposes is the the date you were sent the refund, so last tax year. You need to phone HZmRC and ask why it has been refused.
D says
Hi Sara, Im easily confused. What am I able to claim back if anything on this? Is it the £116? I filled in the online tax form but wasn’t sure where to fill in about this?
Thanks D
interest and fees
£2035.43
8% interest net
£466.29
total settlement
£2501.72
tax
8% interest gross
£582.86
basic rate tax deduction
£116.57
Sara (Debt Camel) says
Yes it’s the £116. The example and the picture in the article above show a similar situation.
Is this the only refund you have had in this tax year?
D says
I filled in the online form but its different to your examples and I sent it without putting in the info from the interest on the refund! lol do you know what section I was meant to add it, I just put in my P60 total earned and taxed and that was it.
Hope im allowed to do it again, I received it last October.
Sara (Debt Camel) says
If you haven’t put the details about the payday loan refund on the form it’s hard to imagine that is correct. I suggest you phone up HMRC and ask.
Claire says
Hi,
If you don’t claim this taxed amount back, would the HMRC eventually catch up and sort it out, please? Do you have to submit the form or could you sit back and get an extra £200 the next April for example?
I am not yet at that stage but would like to know ahead of time. Thanks for this and all you do on this site – a lifesaver as I’m just starting full-time study again at post graduate level so don’t get any help with childcare, this is going to help us so much! I had no idea the interest on 5 payday companies and two credit cards had cost me so much – about 10K, all within the last 6 years.
Sara (Debt Camel) says
I don’t think so. It’s not like PAYE problems which usually do get sorted. The PPI firm or payday lender doesn’t know your NI number or tax reference number so I doubt the amounts can be easily tied back to your tax account.
Clare says
Can someone assist with working this out withe me.
I’ve had 3 refunds.
Sunny
Total interest paid: £671.28
8% simple interest: 187.95
Total refund: £859.23
Wonga
Total interest & fees: £1,705.88
8% interest net: £373.42
Total Settlement: £2,079.30
Tax
8% interest gross: £466.77
Basic rate tax deduction: £93.35
QuikQuid
Refunded interest & charges: £755.49
Interest at 8% simple: £227.22
20% tax withholding on interest £45.44
Amount paid: £937.26
I’m trying to fill in the tax form to claim back some tax. I’m going to attempt to work out myself and see how I get on. But some help would be appreciated.
Thanks in advance.
Sara (Debt Camel) says
So Sunny didn’t deduct any tax? Were all these refunds in the current tax year? Are you a basic rate tax payer?
Clare says
Sunny only took 8% simple interest : £187.95
And these were all paid this year from June -> Oct 2017.
And yes basic tax payer.
Thanks
Sara (Debt Camel) says
OK so you have had tax deducted of £93 by Wonmga and £45 by QQ. That comes to £138 tac paid in total. But the first £200 should be refunded so you should get all the £138 back from HMRC.
Clare says
I think I over complicated it for myself,
Again, thank you so much for your helps
??
Many says
Hi Sara , could you help please I received a refund from Provident and paid tax on this , I currently don’t work or receive benefits so have no income of my own just my husbands wage can I claim back the tax I paid even if I have no income to state on form R40 ….. many thanks
Sara (Debt Camel) says
Yes you can – you should be able to reclaim all the tax if you don’t pay income tax yourself. Just put zero in for your income! Well done on the Provident refund.
Mandy says
Thank you Sara will do that and thank you for your sites help it made all the difference to have good information when I made my claims … so thank you
Linda says
Hi I have read through this article but not the best at figures so thought I’d check a couple of things before putting a claim in (sorry if theyre stupid questions). I’ve had refunds totalling about £3000 only a small proportion showed any breakdown at all of figures on settlement (e.g 8% tax added & tax taken off) as they were settled before FO involvement and it was a simple charges/interest refund. Reading this as there was no mention of interest do I leave them off the claim? Also as the refunds from companies total £3000 is it worth me doing at all? I’m a lower rate tax payer and my finances are tight so don’t want to be left with a bill.
Sara (Debt Camel) says
Only the 8% element is taxable – if you had refunds directly from the lenders which didn’t include an element for the extra 8% then they are not taxable at all (because it’s just your money that is being returnd).
So if you are completing a tax refund form, you should ignore the refunds which didn’t include 8% interest.
Do you want to give the numbers for the other refunds you have had, those that include an 8% element?
Linda says
HI Sarah yes that would be helpful if you could have a look I’ll get them together and post them on here later if thats ok.
Linda says
Hi Sarah these are the figures for my loans I have only included the refunds where tax has been added as you said hence why the overall figure is lower:
Morses club: refund of interest and charges-£160.08, 8% interest-£49.33 = £209.41, – 8% tax £9.87, refund of £199.55
Wonga: refund of interest and charges-£1474.59, 8% interest-£604.89, less unpaid principal £382.00, – 8% tax £121.00, refund of £1576.59
Sunny: refund of interest and charges-£12.78, 8% interest £4.08, refund £16.86
Wageday Advance: refund of interest and charges-£248.60, 8% interest £45.51, less unpaid principal £64.81 refund £229.30
Sara (Debt Camel) says
“I have only included the refunds where tax has been added” – actually I said to include all the refunds where 8% interest was added – that is probably the same as what you wrote, but it’s good make sure.
Assuming your list is the complete list of all the refunds where 8% interest was added:
– on the Morses Club, you had c. £10 deducted
– on the Wonga, you had £121 deducted
– on Sunny you should have had 20% of £4.08 deducted which would have been about 80p
– on WDA you should have had 20% of 45.51 deducted which would have been about £9
So the amount you should be able to reclaim from the taxman = 10 + 121 = £131.
(If the small amounts for Sunny and WDA had been deducted you could have claimed those back too.)
(If the total had come to more than £200, you could only get £200 back.)
Linda says
Hi Sarah yes that’s what I meant sorry about that. I’ve double checked the wageday advance and sunny and no tax was deducted. Can I ask one more question please I have a couple more complaints ongoing where I’ve had to put forward more information if I win these can you put in a second claim to take it up to £200 as my total so far only totals £131? Or us it just one claim per year? Apologies for my ignorance here. I’ll put in a claim today thanks so much for your help.
Sara (Debt Camel) says
You can put in more than one reclaim in a tax year, but if you have got other complaints ongoing, it will probably be easier if you wait until either they have completed OR it gets to April, because that is then the start of a new tax year.
Davey says
Hi Sarah
Am I better off waiting until after April so I can give the taxman an accurate figure (ie when I receive my P60).
I don’t normally get this from my employer until the beginning of May. Can I still claim for the tax back then?
Thank you
Sara (Debt Camel) says
It’s no problem claiming back for the previous tax year, so in May will be fine.
Linda says
Hi Sarah/all just an update I followed your guidelines on here and received a tax refund cheque today for £128, only took just over a couple of weeks as well. Thanks, another excellent tip I would have known absolutely nothing about if it wasn’t for you site. I do have two more refunds coming my way but decided to start the process now as they’re 247 Moneybox and Lending Stream so it could be a while for those two as not the best to deal with. Can I ask please can I put another claim in in the new tax year starting April 18 as I should have had my other refunds by then?
Sara (Debt Camel) says
Yes you can do another claim in the next tax year.
Linda says
Thank-you as I say another excellent piece of information. I advise everyone who’s paid tax on a refund to do this it’s really easy and can be done online no fuss
Acee says
Hi Sara I’ve had letter saying I need to provide proof of the tax from the payday loan refunds I’ve had, do i need to get the certificate from each of the lenders or will the letters from the Ombudsman be enough?
Sara (Debt Camel) says
I don’t know, but I suspect it has to be from the lenders.
Acee says
I’ve spoke to them they said letters from the loan companies would be fine so I shall see
Robert says
Hi Sara
I got a payday loan refund, would I get the tax back on this? Do I have to be a non tax payer also?
Thanks
Sara (Debt Camel) says
If you are a non taxpayer, you should get a refund of any tax deducted (unless the refunds were so huge they pushed you into being a tax payer!)
If you are a basic rate taxpayer, you should get a refund of any tax deducted up to a maximum of £200 for that tax year. If you had a PPI refund and payday loan refunds, you have to add up all of these amounts – the maximum you can get is £200, it is not £200 for each refund. the article above has some examples.
Robert says
Thankyou. Here is what I received with the redress:
Original PPI £281.77, PPI loan interest £489.53, Interest £880.23, Tax 20% and then nett total.
Would I qualify for a small tax refund if this was only one I received on 20/10/2017? If so what form template can I use?
Robert says
It was £176.05 tax that was deducted. I am on standard rate of tax ie over 11500 allowance but under the 40% tax rate. Thanks.
Sara (Debt Camel) says
Then if this is your only refund in this tax year, you should get all that tax deducted back as it is under £200. the article above says what you need to do.
Robert says
Thankyou Sara for the information. If my settlement was dated 19 June 2017, can I clarify what tax year that would be please?
Sara (Debt Camel) says
The current tax year 2017-18. As a broad guideline, tax years run April to March the following year.
bruce says
Hi ,I’m a bit confused by the response my wife has had from HMRC today.
She received a PPI refund from HSBC in November, but they had actually deducted tax at basic rate of around £750 for the interest payments etc.
We then applied to get the tax back as she is a non tax payer, filled in the r40 and sent it off 2 weeks ago.
She has now had a response from them saying, i need you to confirm the details of your income, the amounts you’ve given for bank interest don’t seem to me to be correct.
From 6 April 2016 tax should no longer be deducted from bank interest.Please send me details of your bank interest that you received for tax year ended 5 April 2018.
I need you to give me details of each individual payment and the tax deducted from it that you included in the total amounts on the R40.You also need to tell me who you received each payment from.
once you’ve done this,please send the info back to me ,i’ll then deal with your claim and work out if we owe you any tax.
Should we just send a copy of the letter from hsbc detailing the amounts, and how do we find out any other interest she was paid on her savings which would not be a lot anyway, nearer pennies rather than pounds i would think.
Sara (Debt Camel) says
Yes, send them a copy of the PPI refund letter.
bruce says
okay thank you Sara, so do you think it is those amounts they are wanting info on rather than whether she has had any other interest from her account?
Sara (Debt Camel) says
Sounds like it. She could say she thinks she has had less than £5 interest from any other accounts (if that’s true of course).
bruce seaton says
Hi Sara, just a further update, my wife is being messed about terribly by HMRC, we done what you suggested above, sent off the full details,copy of the letter from hsbc, and also included several photocopies from HSBC,showing that her account is generally overdrawn,and does not receive interest for savings.
They then several weeks later wrote back saying thank you ,please fill in this R40 form!! I phoned on her behalf and explained we had already filled in an r40, then at their request had sent a copy of the refund letter etc, why were we now having to do it again.
Short story long is sounds like he didnt have a clue, he started off that it didnt match the figures they had, but then after i explained the several things we had sent them, and there was no other interest etc, he said oh yes I dont understand it, it looks to me like you have entered everything correctly, so why we are asking for this again is strange! He said he would escalate it to an enquiry to a higher level to ask why it had been returned,and if anything what had to be done,and they would be in touch, now again that was three weeks ago, and still nothing?
Sara (Debt Camel) says
oh dear. These reclaims ough to be common – there are tens of thousands of people who should be able to make one, but there is so little known about them that sometimes they seem to get treated as “a curious situation” by HMRC.
If you don’t get a reply in another few weeks, email again and ask about progress.
Kate says
What happens if the tax is deducted from a refund that are in your name but you didn’t actually receive? I had refunds (totalling £4600) of PPI from several barclays products each of which deducted at basic rate (total deducted >£500) and I am a non-tax payer. The refunds went to my official receiver so are they classed as my income or not please? Is it worth me declaring this to the taxman? Do I have to declare this even if I didn’t get the funds?
Sara (Debt Camel) says
No point – if you get the tax back it has to go to the OR.
Ann Marie says
hi
Can someone please help, I have read all of the above but I am still struggling……..sorry
I have just had a huge payout from provident and tax has been deducted, I am a basic rate tax payer
refund. £9942.91
Notional interest 8% £3712.05
20% tax withheld £742.41
I have just phoned hmrc and told I cannot claim a refund as I am self employed and should declare this is my tax return.
Is this correct? The advisor had to go and check with a colleague several times.
Will I have to pay more in my tax return?
thanks
Sara (Debt Camel) says
The R40 form is designed for use by people who don’t submit a self-assessment form. As this says https://www.gov.uk/government/publications/income-tax-claim-for-repayment-of-tax-deducted-from-savings-and-investments-r40 “To make a claim – If you’re registered for Self Assessment, make a claim on your Self Assessment tax return”. I hadn’t realised this and I will make the article clearer.
On your self assessment form, there will be a bit where you enter “savings income where tax has been deducted at source” – there you put 3712.05 as “savings interest” and 742.41 as the “tax deducted”. (assuming this was your only refund in this tax year.)
You shouldn’t have to pay any more tax unless EITHER you were given a large refund with a lot of Notional interest and no tax was deducted OR you were very close to paying higher rate tax and this extra savings income has pushed you into the 40% tax band. The most likely result is that you will get a £200 refund on the tax you paid.
PS that is a very big Provi refund – well done! It would be great if you could put a comment about it on this page: https://debtcamel.co.uk/refund-doorstep-loans/ as people love to hear success stories.
John says
Hi Sara
I had a PPI refund of just over £3000 in 2016 and paid about £320 in tax on the 8% interest. I am currently owing HMRC about £1400 in underpaid tax P.A.Y.E from about 10years ago, I had 2 jobs but HMRC gave the two employers the same tax code hence the underpayment.I was in an arrangemen with HMRC to pay monthly instalments towards clearing the debt, but became unemeployed after paying off about £600 as the under payment was for £2000.MY debt account is currently on hold due to me being currently unemployed as I contacted them and explained my situation.My question is if i claim back the tax on the interest, as I am currently not a tax payer at the moment, will the HMRC offset any payments due against the oustanding debt for underpayment of P.A.Y.E for 10 years ago? I could do with the £300 now but it may be no point claiming as I might not get anything and they might end up demanding payment of the rest of the debt which i currently dont have, I know that eventually I will have to sort out my debt with them.
Thanks
Sara (Debt Camel) says
I am not a tax expert but my guess is the chance of them sending you a cheque if you owe them money may not be good.
Nick says
Hi All
I am hoping someon can help me, I have just received a PPI payout from Santander and trying to understand if I can claim the deducted tax back or if I owe more. I am a high rate tax payer but do not earn interest from any savings or investments etc.
Breakdown is below
Refund of premium £1082
8% interest £1280
20% Tax deducted £256
Can I claim back £200, or as I am a high rate tax payer I understand my allowance is £500, as I got paid out £1280 do I need to pay 40% on the difference between 1280 and 500 therefore meaning I should have paid £312 tax….I’m very confused
Sara (Debt Camel) says
Unfortunately you do indeed owe extra tax – on your figures 512 less 200 less the 256 already deducted. Whether the tax man would ever realise this I have no idea.
Nikola A Morris says
Dear Sara – Debt Camel,
Thank you – I have read above and am enabled to claim the tax Lloyd’s had deducted from my PPI refund.
Much appreciation. Sincerely, Nik A Morris.
Stefan says
Hi Sara, I have received payday refund from wonga in Sept 2017 and payed the tax for the money. I haven’t received anything yet from HMRC, is it late if I claim now for the year 2017-208, or should I wait until they send me the check? How long does it takes until they sent it to me?
Stefan
Sara (Debt Camel) says
It’s fine to claim now for a refund you got in the last 17/18 tax year. You do have to claim this, so far as I know HMRC doesn’t pick these up automatically and give you the refund.
Most refunds are sorted in a month or so but some inexplicably take longer.
Stefan says
Thanks for reply Sara.
I am basic rate tax payer and this are my figures from wonga:
Tax details: 8% interest gross: £1,236
basic rate tax deduction: £247
I am entitled to claim this? How much should I claim?
Sara (Debt Camel) says
If you haven’t already used up your £200 savings interest free allowance for last year, then yes you can.
You may have used this allowance by either having a LOT of savings, probably over £100,000 (haha) or by having other refunds such as PPI. If you don’t think you have used any of this allowance, you should get £200 back.
Kate says
Hi all,
Just to let you know, I claimed back all my tax taken off paydy loan interest (non tax payer at present – under theshold due to being student and only working p/t) and it’s taken about 4/5 weeks but I checked my online account yesterday and it popped up as a message on the main page after logging in, the letter came this morning. I’ve claimed online to get it sent straight to my account – ‘within 5 working days’. Just under £300 so worth doing!
Jasmine says
Hi Sarah.
Please help me ! This is one of refund that I get from payday loan .
Should I can claim back £200
***
(£624.98), plus statutory 8% interest (£142.89). In line with HMRC guideline we will deduct 20% (£28.58) from your statutory interest and pay this to HMRC, meaning that you will not have to declare this redress in your tax returns.****
Thank you so much
Xxx
Sara (Debt Camel) says
The tax deducted here was £28.58. If you haven’t had any other refunds in the same tax year, that is the amount you can claim back from HMRC. £200 is the maximum you can get back in one tax year.
Jasmine says
Hi Sarah
Please help !
I have refunds ppi from Lloyds
Gross payment £928.03
Gross interest £353.81
Tax £70.76
Net interest paid. £283.05
Payday UK
Total interest paid £89.85
Total interest 8% £31.15
Total 20% tex deduction from 8% interest £6.23
Total redress £114.77
Wonga
Total Interest and Fees £648.26
8% interest net. £188.63
Total Settlement. £836.89
Tax. 8% Interest Gross £235.79
Basic rate Tax deduction. £47.16
Saftynet
October 2014 (£624.98), plus statutory 8% interest (£142.89). In line with HMRC guideline we will deduct 20% (£28.58) from your statutory interest and pay this to HMRC, meaning that you will not have to declare this redress in your tax returns.
This is all refund I have before beginning May
Could I still can get the tex
Can I still get the tax refund back ?
Thank you so much
Sara (Debt Camel) says
Were any of these refunds before April 5th?
Jasmine says
Hi Sarah
Yes it Lloys only on is Refund before April 5th
Another
Wonga Refund on 12/4
Saftynet Refund on 13/4
Payday UK 26/4
Thank a lot for your help
Sara (Debt Camel) says
ok so you need to submit one claim for last tax year 2017/18 for the lloyds PPI tax deduction of c£70
Then another one for this tax year 2018/19 for the Wonga, Payday UK and Safetynet Credit tax deductions. If you think you might get any more payday loan refunds, it would be sensible to wait and see so you can do them all at once.
Aida says
If you had several payday loans with FOS and some were concluded in your favour but others are still in a queue. Can you claim as you go along?
Sara (Debt Camel) says
You can, but it’s easier to do all the claims for a tax year at the same time (or as soon as you hit the maximum £200 refund). So any refunds you had before April 5 will have been in the last tax year so claim for them now.
martin says
I filled out the R40 Form online however I made a mistake eg I provided the wrong answer to the UK interest and dividends part of the form, I have received and email from HMRC with a reference number stating that they will contact me by letter or phone within 15 days . I was thinking of resubmitting the claim however I dont want to mess things up, any advice would be much appreciated.
regards
Martin
Sara (Debt Camel) says
If the email from HMRC has any contact details, I suggest you phone them. Otherwise wait for them to contact you now – it may confuse things if you just resubmit your claim.
martin says
Thanks for your advice
regards
Martin
Brian says
I put in two in two claims separately, with two cover letter outlining what the claims were for, and secondly the one for this Financial year as I don’t earn enough to warrant 40% tax and haven’t done in previous years, that I was submitting a claim for this year.
Both were turned down, and both are being reassessed after phoning them up yesterday.
That is pretty annoying given the fact I outlined everything in the cover letters. The joys of having no local tax office I presume.
Sara (Debt Camel) says
It just shows how few people are making these reclaims. Despite the record amount of PPI reclaims, the possibility of tax refunds is hardly ever mentioned!
martin says
Hi Sarah
I have received a letter from hmrc stating that I paid the right amount of tax which was down to my error when filling in the p40 online
I have decided to fill in the form by hand and post it to hmrc however I dont know the address to post the letter to, I live in Liverpool
any help would be very welcome
regards
Martin
martin says
Hi Sarah
I have completed the R40 Form online with no errors this time!
many thanks
Martin
K says
Hi, I wonder if anyone can help.
My husband and myself had two successful PPI Claims upheld at the end of the 2017/2018 tax year, one in his name and one in mine, tax deducted at 20%. I do not pay tax and husband is a 40% tax payer.
We only have the one bank account which is a joint account.
I have read that the 8% ppi interest is classed as savings interest and as we have a joint bank account we split the interest, same as our bank interest, and are taxed on our relevant half’s. I have also read that it doesn’t matter about the bank account and we’re taxed on the payout to the individual person.
We phoned HMRC and the lady my husband spoke to didn’t seem to understand what my husband was saying and just responded with “both fill in an R40 form and split it all down the middle as it’s a joint bank account”.
We filled out the forms and sent them a covering letter, both received responses stating the information supplied didn’t look correct and wanting more information, so we’ve sent another letter with more information, both the ppi tax certificates and a print out of the interest paid to our joint bank account, also stated the date we phoned HMRC and the information received from one of their advisors…..and now we wait.
Does anyone know for definite where we stand with this? Is the interest split and we pay tax on our “half” or is it the individual payout?
Many thanks :)
Sara (Debt Camel) says
I am not a tax expert but I would guess that he pays tax on the one he got and you pay tax on the one you got. So he may be due a refund or pay have to pay more as he is a 40% tax payer and you should get a full refund.
K says
Thanks Sara, we thought that would be the case. I should be due a full refund and he’ll have more tax to pay, we have put aside the equivalent tax amount so there’ll be no nasty surprises there. I did try searching the internet for the information but there’s so much conflicting information and unfortunately the advisor didn’t seem to understand what my husband was trying to tell her and had to go and ask someone else.
Polly says
I received a refund of which the tax for my 8% interest was calculated and deducted at around £390. I’m a carer, so I get carers allowance and receive no other taxable income. My husband is a base rate tax payer, and we have the marriage allowance together.
Do his earnings affect my tax? How can I find out how much I may be entitled to claim back?
Thanks, also thanks for all the tips regarding claiming back with Wonga!
Michael Rennie says
After twenty years of multiple heart attacks reducing my income, leaving me with heart failure and depleting my savings I decided to give PPI reclaiming a go. It was successful and £1467.60 awarded. Tax of £158.28 was deducted before receipt.
I am well within the £1000 a year allowance for interest income from savings and have no income earning investments. My only income this tax year, and probably all future years is the basic state pension and pension credit. I probably have just enough savings left to pay for my own funeral and it seems a bit rapacious for HMRC to reduce those savings by taxing them.
Information given in the submitted R40 form was accurate so could you please detail just what it is you believe to be incorrect.
Sara (Debt Camel) says
Have you sent in a R40 form and HMRC have rejected it?
Dave says
Hi. Had a PPI refund Nov 2017. Received £12,000.00 nett. I have lived in spain for last 5yrs and am both resident and tax resident. How do i reclaim the deducted tax? Thanks
Sara (Debt Camel) says
I am sorry, I have no idea.
Sharon says
Hi, I’ve received an PPI payout. They have applied the 8% but have also deducted income tax at 20%. The claim was carried out by a claims company who have taken their percentage but also shows another 20% tax deduction, this now means 40% tax has been taken.
Is this correct?
Thanks
Sara (Debt Camel) says
It doesn’t sound right, but you need to ask the claims company to explain this.
Link says
Hi Sara,
I’m a little confused as to if I should go ahead with this or not? I have had the following refunds;
Wonga:
Interest & Fees – £2101.27
8% Simple – £540.03
Tax Deducted – £108.01
Sunny:
Interest & Fees – £1033.91
8% Simple – £156.39
Tax Deducted – £31.38
QuickQuid:
Interest & Fees – £122.40
8% Simple – £17.77
Tax Deducted – £3.55
I’m on basic rate tax. Can I claim back the £142.94 in tax deducted?
Sara (Debt Camel) says
If those are the only refunds you have had in this tax year then yes, you should be able to get all the tax deducted back.
One question – when were your loans from QQ that were refunded?
Link says
Hi,
Date of loan was 15/08/2016.
Regards
Sara (Debt Camel) says
OK, the 8% looks right then!
Lou7 says
Advice please. If you have a refund but some of what you get goes to pay off what you owe, do you still pay tax on it?
Sara (Debt Camel) says
Yes, if your refund included the 8% element.
Lou7 says
So if I ask for a breakdown of my refund including tax paid then I can fill in the tax form, that’s all I need isn’t it?
Sara (Debt Camel) says
Yes
Sarah-Anne Wood says
Hi
As a non-UK resident, how do I go about claiming back HRMC deduction of 738.47 at 20%. I have form R43 but can’t seem to work out there to add it.
Thanks
Sara (Debt Camel) says
I’m sorry but I can’t say whether you are entitled to UK tax allowances, or whether you may need to pay tax in your country of residence or whether any double taxation treaties apply.
Village Idiot says
Hi, I have had a refusal from HMRC about this. I’m a basic rate tax payer. I’ve not had any other form of savings interest. It’s for this current tax year. They have simply sent a reply from a ‘tax assistant’ saying ‘we have calculated you have paid the right tax’.
I have only seen their reply this weekend, I can phone them up, is there any magic phrase I can use perhaps to explain to someone who is maybe quite junior that what I am asking for is correct?
Thanks,
-VI
Village Idiot says
I did do this very quickly after getting the Wonga refund. If the system relies on Wonga sending the money to HMRC, perhaps that hasn’t happened yet, and that is why HMRCdo ‘t see the need to refund?
Thanks again.
Sara (Debt Camel) says
It may be simpler to leave it until the end of this tax year when you can prove the situation.
lynda says
hi sarah,i have received 3 ppi refunds do i add them all together and put them on one r40 form or should i do them seperate. i have been told if i am claiming a refund to fill in sections 1,3 , 11 and 12 is this right ? thank you
Sara (Debt Camel) says
How much does the tax deducted add up to on the three refunds? Were they all received this tax year? Are you a basic rate tax payer?
lynda says
they add up to £671.28 and yes they are all this year ,i am a basic tax payer.
Sara (Debt Camel) says
You will only be able to claim £200 back across the three of them. But yes, you should put all three PPI refunds on the same R40 form.
lynda says
i got a p60 from my employer in may will this have the information i need to fill the form in ?
Sara (Debt Camel) says
No, that has the information for the last tax year. The easiest thing to do is wait until next May when you have all the information for the tax year 18/19 and can use the P60 from your employer to fill in the form.
lynda says
ok thanks for your help.
Sharron says
I’m currently a non tax payer and had a ppi win. Tax deducted was £735 I’ve filled in r40 through the hmrc gateway with help from them on the phone. Do you think I’ll get this back ? Thanks
Sara (Debt Camel) says
Unless the 8% is so much it takes you over into being a taxpayer, yes I would have thought that you will.
Georgina Louise Battson says
Hi i have had a few ppi refunds in the last few months currently totalling about £4000, i have paid income tax on these on the 8% part. I’m not currently working so don’t have any income. Would i be able to claim back the income tax back on these if under the threshold.
nikki says
I received PPI refunds back in December 2015. Can I reclaim the tax back that I paid on the interest or is this only allowed from April 2016? I was a tax payer.
Sara (Debt Camel) says
The new £200 back is only from April 2016. before then you can only reclaim if you were a non tax payer.
Stephen Davies says
Surely the if a PPI refund was for PPI paid over many years, does that entitle me to claim for 4 years relief for one PPI payment ?
Sara (Debt Camel) says
No, all treated as savings income in this tax year.
Donna says
Hi
Is it possible to claim tax back if you live in the Channel Islands and the tax was pay on payday loan refunds in the UK
Sara (Debt Camel) says
No idea!
Karen says
Hi Sara,
I have only just discovered about claiming back tax on the 8% interest on PPI refunds and like others I’m a little unsure about the numbers.
In 2016 and 2017 I received quite a lot of PPI refunds and after checking I can confirm that I was taxed 20% on the 8% interest. The total amounts of tax are as follows:
2015/16 £1108.24
2016/17 £ 585.75
I am a basic tax payer in full time employment. As I am over the £1000 threshold for 2015/16 does that mean I will owe the taxman?
Thanks
Sara (Debt Camel) says
It depends how close you are to the higher income tax band. If the 8% interest didn’t take you over it, so you remain a basic rate tax payer, then you should still be able to get £200 back – that is the cap. You will only owe the tax man if the 8% interest took you into the higher rate band.
Karen says
Thanks Sara, i’m pretty sure I’m well below the threshold but will double check before applying. Thanks
lynda says
hi sara,god i’m confused.this is the 3rd time i am sending this form back ,i’ve just rung the tax place and he said i’d filled the form in wrong after telling me origanally to put down the 3 refunds which was the gross amount,then i took tax off and put the amount i was left with down.he now says it doesnt add up. he’s told me to put down the amount that i recieved myself .out of the total amount which was £6334 i paid tax of £671 and i paid gladstone brookes £1520 which left me with £4142.i am abit unsure now whether to bother because he says 20%of this amount should be at least £1200 not £671 am i going to end up paying more,i am a basic tax payer lynda
Colin thomson says
Hi I received a few ppi claims back total 8% interest was 12,358.23 tax taken of was 2,944.29 these were received on the 21/04/2017 I retired on December 10/11/2015 I do not have a P60 only the P45 when I retired can I use that to fill in the form to claim back the tax thanks Colin
Sara (Debt Camel) says
What matters is your income in the tax year your received the payout, so 2017-18 from what you have said. This will be the pensions and any other income from savings and investments that you have in that year.
If you are a basic rate tax payer after taking into account the extra 8% interest you received, then you can claim back £200 of the tax deducted in that year.
Stephen Page says
Hi, received a PPI refund 5TH April 2017 covering November 2001 to August 2015. received Statutory Compensation of £3357.66p. with a Deduction from Statutory Compensation interest for income tax at 20% of £671.53 p. can you tell me if I am entitled to any refund, and is it spread over the years of my PPI or just in the tax year I received payment.
thanks Steve
Sara (Debt Camel) says
The £3357 is treated as savings income all in the year you got it. If you are a basic rate taxpayer as the article above says you should be able to reclaim £200 of the tax deducted.
Stephen Page says
thanks for speedy reply and will be contacting HMRC asap
Neil says
Hi Sara,
I have had a payday refund come back, and got taxed £82.31, so i can claim this back correct? I’m a basic tax payer too. But the only break down of what i got back was the breakdown below from the adjudicator at the FOS. Do i need any official paperwork,email from the company who i got the refund off?
‘They have made an offer of £2,109.68 for your loans. This includes interest totalling £1,780.42 plus £411.57 for 8% interest. There has also been a deduction of £82.31 for tax purposes. They have also indicated as all loans were repaid on time there are no negative entries on your credit file.’
Thanks in advance
Neil
Sara (Debt Camel) says
If this is the only refund you have in this tax year, yes you should be able to claim this back. Ask the lender for a certificate showing how much tax they deducted.
Neil says
Thanks as ever Sara :)
Neil says
Hi Sara,
I emailed and asked for a certificate showing the tax deducted as you said, do they have a time-frame in which they have to respond to? As this isn’t a complaint i’m not sure they have a set time to reply by.
Thanks Neil
Sara (Debt Camel) says
I would remind them in two weeks and send a complaint to the Ombudsman after 8 weeks, asking for compensation for the inconvenience.
Neil says
After emailing them for a third time asking for the certificate, with the following added into my email to them;
‘I have now been waiting for 7 weeks for this certificate and have have no correspondence from you at all, which is unacceptable. I will be going back to the adjudicator from the Financial Ombudsman who dealt with my complaint for your company and i will be asking for compensation for inability to deal with a simple request.’
I got my certificate back from them the next day. Looks like just the threat of asking for compensation got them into action on this.
Neil
david dutton says
I received a PPI refund of just less than £3k from Black Horse Finance earlier in the year and I completed the form to claim back the partial tax refund, sent to HMRC, they responded saying I hadn’t paid enough tax and now my wage has been put on an LX tax code! employer confirms i’ve paid exactlyt he right tax via my wage so it must be how HMRC have applied this refund – they applied it as a Unit Trust on their systems for some reason! needless to say i’m waiting on a response.